• Mexican Steelmaker to Buy Republic
• Union Notifies Stelco of Impending Strike Vote
• Rolled Alloys Expands Cincinnati Facility
• AK Steel Processes First
  Heat Through Degasser
• Allegheny Tech to Boost Titanium Capabilities
• Mills Adjust Prices, Surcharges
• Sharon Tube to Expand Wheatland Plant
• Dofasco Rebuilds Blast Furnace
• Mittal Offers to Buy Vitkovice Steel
• Fatal Accident Leads to OSHA Citation
• Austrian Aluminum Mill Lands Major Aerospace Order
  
• Briefs
• People

Mexican Steelmaker to Buy Republic
Republic Engineered Products Inc., Fairlawn, Ohio, which makes special bar quality steel, has agreed to sell its business to Industrias CH, S.A. de C.V. through a 100 percent stock purchase, including shares held by majority owner Perry Capital, New York.

Republic will become a subsidiary of Grupo Simec, Guadalajara, Mexico, of which ICH is the majority owner. The cash purchase price of $229 million was financed by internally generated funds.

“This combination will create an international strategic alliance,” says Joseph F. Lapinsky, Republic’s president and CEO. “Republic will continue to operate as a stand-alone business, but will have a resource in Mexico as we strengthen our relationships with customers expanding in Mexico and South America.”

This transaction preserves Republic’s ability to continue its capital investment program, he says, adding that ICH intends to soon put Republic in a debt-free position. One of ICH’s main objectives is to prepay Republic’s debt within 12 months, starting with $71 million that will immediately be paid once the bank creditors accept.

“The installation of the new caster at our Canton plant remains on schedule, and additional capital investments will be considered after that project is complete,” Lapinsky
says.

Simec’s recent sales of SBQ represented one-third of its total sales. As a result of the acquisition, this line of products is expected to account for 65 percent of its consolidated sales. The acquisition strategically positions Simec in a market that typically has less price volatility and higher margin than commodity steel products.

Sergio Vigil, Industrias director and CFO, says Republic will be a “valuable resource as we pursue additional U.S. business for our other lines of steel products.”

Perry Capital acquired Republic’s assets in December 2003. A registration statement was filed in November 2004 to sell a portion of Republic in an initial public stock offering. The opportunity to sell Republic to ICH presented itself during the registration process.

ICH operates four electric furnace steelmaking centers and four processing plants, focusing on specialty steel long products, welded pipe, structurals and rebar. Customers include auto parts makers, oil and gas companies, industrial equipment builders, construction materials suppliers and steel distributors. ICH employs about 3,300 people and has steelmaking capacity of approximately 1.9 million tons.

ICH has grown through acquisitions. It purchased Grupo Simec in 2001 and the Mexican steel assets of Corporacion Sidenor (Spain) in 2004.

Republic supplies engineered steel bars for use in axles, drive trains, suspensions and other critical components of automobiles, off-highway vehicles and industrial equipment. The company has steelmaking centers in Canton and Lorain, Ohio, and value-added rolling and finishing facilities in Canton, Lorain and Massillon, Ohio; Lackawanna, N.Y.; Gary, Ind.; and Hamilton, Ontario. Republic employs about 2,500 people and has steelmaking capacity of 2.3 million tons.

Union Notifies Stelco of Impending Strike Vote
In a July 27 letter to Stelco CEO Courtney Pratt, United Steelworkers Local 8782 served the financially troubled steelmaker with 90-day strike notice.

“After meetings with my membership, informing them that the restructuring plan you have endorsed is not negotiable, it is with deep regret...that we are serving 90-day notice of our intention to strike,” Local President Bill Ferguson wrote.

After 18 months of CCAA discussions and 12 months of contract negotiations, he wrote, “it has become painfully apparent to my membership and the local’s leadership that you do not have any intention to negotiate with us over a meaningful restructuring of Stelco that will lead to a viable long-term solution to Stelco’s problems.”

Stelco is under Canada’s Companies’ Creditors Arrangement Act, similar to U.S. Bankruptcy Court protection, while it reorganizes. Ferguson alleged that the only stakeholders that will benefit from Stelco’s proposed restructuring plan are financial speculators.

Pratt immediately responded with a letter to employees concerning the union’s actions. He wrote that the company’s restructuring plan outline filed July 15 does not call for any elimination of wages or benefits from employees or retirees, or for a 10-year freeze on negotiations for pension plan improvements.

The plan “does propose that pensions not increase until the pension plan deficiency reaches an agreed funding ratio,” which would protect the active work force and retirees by ensuring that the pension deficiencies are dealt with. “Pension benefit increases for active employees would increase the solvency deficiency. This would only add to the company’s funding burden and increase the risk for retirees,” Pratt states.

He claims the international union and Local 8782 “have chosen to use the leverage of an expired collective bargaining agreement and strike threats to influence the CCAA restructuring process, even though no concessions have been asked of them.”

He adds that the company is not in default of any of its pension funding or other employee-related obligations.

“We’re all in the same boat and will succeed or fail together. The plan filed by the company does not threaten jobs, pensions or union contracts,” Pratt wrote, adding that Stelco wants to work towards a renewal collective agreement whenever local union leaders are ready to negotiate seriously.

Pratt acknowledges that the strike notice creates uncertainty among stakeholders—including customers. “The last time Local 8782 took this step, the company lost the business of General Motors, its largest customer. That business has not been regained. The cost of this loss to the company has been significant.”

He also denounced as falsehood Ferguson’s claim that only financial speculators will benefit from Stelco’s proposed restructuring plan. “The plan envisions the conversion of a very significant portion of existing debt into equity, and extends the maturity of the remaining debt well into the future.”

He urges union leaders to “tone down the rhetoric, resume discussions and ease the uncertainty and instability surrounding this last push for a positive outcome” for Stelco’s future.

Rolled Alloys Expands Cincinnati Facility
Rolled Alloys, Temperance, Mich., which makes heat and corrosion resistant, high temperature and titanium specialty alloy products, completed a 12,000-square-foot addition and installed new processing equipment in its Cincinnati warehouse and processing center.

The new equipment includes a Trumpf Trumatic L3030 laser with a 62- by 122-inch cutting bed that can cut stainless grades to a maximum of 5/8-inch thick and nickel alloys up to 3/8-inch thick; a Timesaver burr removal machine; a Virtek coordinate measuring machine for accurate inspections; and an Accurshear 0.25-inch hydraulic shear with a 6-foot bed that can cut material up to 0.125-inch thick.

AK Steel Processes First Heat Through Degasser
The first heat of molten steel was processed through a new vacuum degasser at AK Steel’s Ashland, Ky., Works on July 28. Addition of the new vacuum degassing facility, which is associated with the steelmaking shop, along with a modification to the existing continuous caster, are part of a $65 million modernization of Ashland Works, which has been underway during the past year.

“The successful start-up of our new degasser represents the fulfillment of AK Steel’s significant investment in modernizing our Ashland Works,” says James L. Wainscott, president and CEO of AK Steel. “Completion of this project enables AK Steel to more closely match its steel production capabilities with customer requirements for ultra-low carbon steel products, primarily for automotive and appliance markets.”

The project was completed two months ahead of schedule. Both the degasser and converted straight-mold caster are currently in the ramping-up process. Once in full production, AK Steel expects that its need to purchase premium-priced degassed steel slabs will be eliminated.

Allegheny Tech to Boost Titanium Capabilities
Allegheny Technologies Inc., Pittsburgh, is planning a $100 million expansion of its titanium production capabilities. These investments are aimed at significantly increasing ATI’s capacity to produce titanium and titanium alloys used for aero-engine rotating parts, airframe applications and in other robust global markets.

Major strategic capital projects include:

• Upgrading and restarting ATI’s idled titanium sponge facility. ATI expects an annual production rate of 7.5 million pounds of titanium sponge from this facility beginning in the first half of 2006.
  
• Building a third plasma arc melt cold-hearth furnace. ATI expects this new furnace to be qualified for production by late 2006. Plasma arc melting is a superior cold-hearth melt process for making alloyed titanium products for aero-engine rotating parts and biomedical applications.
  
• Expanding high-value plate products capacity by 25 percent. ATI expects this expansion to enable it to continue to grow in its high-value specialty plate products business, including titanium plate used in airframe, armor, power generation and corrosion applications.
  
• Continued upgrading of ATI’s cold-rolling assets used in producing titanium sheet and strip products.
  

Included in this titanium capability expansion is a 25 percent increase across ATI’s titanium production system, including increases in vacuum arc remelt capacity, electron beam cold hearth melting capacity and forging reheat capacity.

“We expect over $200 million of annual revenue growth with attractive after-tax returns from these capital projects when they are fully implemented in 2007,” says Pat Hassey, chairman, president and CEO. “Titanium demand from the aerospace market, for both aero-engine and airframe applications, is expected to continue to be robust for the next several years.”

Biomedical is another buoyant market for titanium products used for medical prostheses such as hips and knees. Armor for the government defense market is an emerging application for titanium. In addition, demand for titanium for corrosion applications, particularly from the chemical processing and oil and gas markets, is expected to continue to be strong.

Mills Adjust Prices, Surcharges
AK Steel Inc. raised spot market transaction prices for its regular grain-oriented and TRAN-COR H electrical steel products, effective Aug. 1.

An increase of 18 percent over previous base market prices was applied to AK Steel’s Mill-Anneal (glass film) finish and Lite CARLITE grain-oriented grades, which are commonly used in distribution transformers and other wound-core transformer applications. Transaction prices for AK Steel’s grain-oriented and TRAN-COR H grades with a full CARLITE coating rose 43 percent over prior base market prices. These products are commonly used in stacked core transformers.

AK Steel also expects that new contract pricing for oriented electrical steels will increase by similar amounts, reflecting strong worldwide demand for the products.
AK’s flat-rolled carbon steel customers were advised that a $183 per ton surcharge is being added to invoices for products shipped in August; and electrical steel customers were notified of a $115 per ton surcharge on August shipments.

Allegheny Ludlum raised spot prices by about 26 percent for its grain-oriented silicon electrical steel products, effective
Aug. 1.

Sharon Tube to Expand Wheatland Plant
Sharon Tube Co., Sharon, Pa., plans a multimillion dollar expansion to its Wheatland, Pa., cold-draw facility. The company will install cold-drawing equipment and 22,000 square feet of production space. Construction should be completed in January.

The purpose of the expansion is to increase the cold-drawn size range to 6.250-inch outside diameter by 0.390-inch wall tubing. Sharon makes ASTM-A-513 Type 5 drawn-over-mandrel mechanical tubing at Wheatland.

“The expanded size range enables us to be of further importance to our customer base, offering greater flexibility and support,” explains Bill Perrine, president and CEO.
During the past seven years, Sharon Tube has spent more than $60 million to upgrade facilities.

Dofasco Rebuilds Blast Furnace
Dofasco has successfully started up its No. 2 blast furnace, which was completely rebuilt over the last year to incorporate the most advanced ironmaking technology.

sed to reduce iron ore pellets into molten iron for further processing in the company’s steelmaking facilities, the rebuilt blast furnace features several advancements over earlier designs that make it safer and more efficient. Innovations include automation of the material charging process, complete fume capture for environmental protection, and a covered casthouse floor that allows greater furnace access and improved employee safety.

Dofasco chose to rebuild its No. 2 blast furnace, which was decommissioned in 1994 following the closure of an older, obsolete steelmaking operation, instead of shutting down and relining the company’s No. 3 blast furnace.

The strategy allowed iron production to continue uninterrupted while No. 2 furnace was under construction, and saved Dofasco from the usual production and customer service setbacks associated with blast furnace relines.

Mittal Offers to Buy Vitkovice Steel
Mittal Steel Co. N.V., Rotterdam, submitted a direct offer July 11 to the government of the Czech Republic to purchase 98.96 percent of the shares of Vitkovice Steel for 9 billion Kc (approximately $372 million U.S.).

Ondra Otradovec, Mittal Steel’s director of mergers and acquisitions, says the company’s offer “ensures seamless continuity of the steelmaking in the Ostrava region with all benefits retained by local companies and local workers.

Fatal Accident Leads to OSHA Citation
The U.S. Labor Department’s Occupational Safety and Health Administration recently cited Republic Engineered Products Inc., Lorain, Ohio, for alleged workplace safety violations stemming from a Jan. 27 fatality.

OSHA fined the company $98,500 after issuing a citation for the lack of machine guarding and failure to protect workers from loads suspended overhead.

In the Jan. 27 incident that OSHA investigated, a worker who was attempting to rig several bundled bars to an overhead crane was struck by two of the nearly 500-pound bars when they were ejected from a conveyor adjacent to the work area.

The company has an opportunity to appeal the citations and fine.

Austrian Aluminum Mill Lands Major Aerospace Order
AMAG Rolling GmbH and EADS Deutschland GmbH/Airbus signed an agreement under which the Ranshofen, Austria-based aluminum producer will supply products valued up to 150 million euro (approximately $185 million U.S.) through 2012.

AMAG began supplying Airbus three years ago with sheet for the GLARE composite material. This material predominates in the upper fuselage skin of the A380 Airbus and stands out due to its low weight and load-bearing capacity. The new agreement involves further deliveries of sheet for special applications such as GLARE and aluminum sheets and plates for the EADS Group and the complete Airbus fleet.

“With this major order, our company will certainly participate to a considerable extent in the compensation business derived from Austria´s purchase of the Eurofighter,” AMAG CEO Wolfgang Ortner says.

People
Timken Co. reports that President George W. Bush intends to nominate W.R. Timken Jr., chairman of the board, for U.S. Ambassador to Germany. If confirmed by the U.S. Senate, Timken will be required to resign his position as a member of the board. Until then, he will continue as chairman. Timken has served as non-executive chairman of the board since he retired at the end of 2003.

Carpenter Technology Corp. hired Richard Simons as vice president and corporate controller. Simons, a CPA, comes to Carpenter after 22 years with Hardinge Inc., a machine tool manufacturer, most recently as executive vice president and chief financial officer. Simons succeeds Rich Chamberlain, who retired after 26 years with the company.

Ken Wlodkowski has joined National Bronze & Metals Inc., Houston, as senior technical sales executive. Most recently, he was a vice president of sales and marketing for Ampco Metals, and spent the bulk of his 21-year career at Brush Wellman Inc.

Julie A. Beck and Stephen E. Hare have joined the board of directors of Wolverine Tube Inc. Former board member Chris A. Davis resigned due to other business obligations. With the combination of these events, the board expanded from six to seven members. Beck is senior vice president and CFO of Norwood Promotional Products Inc. Hare is president of the Publisher Services Group of Cadmus Communications Corp.

Frederic Rouyer was named head of sales and marketing for Metal Products North America at Hydro Aluminum. He came to the unit in 2001 to lead the startup of Hydro’s remelt facility in Commerce, Texas. Jim Walters was named vice president of sales and marketing for the West and Southwest regions. Previously, he headed Metal Products’ U.S. sales and marketing unit. He has been with the North American operation for seven years.

Briefs
Maverick Tube Corp. completed the sale of certain assets related to its hollow structural sections (HSS) product line to Atlas Tube. At the June 30 closing, Maverick received cash of about $37.8 million. Together with proceeds expected to be derived from certain retained assets, principally trade receivables, Maverick expects to generate liquidity of about $51 million from the sale. The parties have also entered into a conversion agreement whereby Maverick will continue to produce HSS products for Atlas at Maverick’s Hickman, Ark., HSS mill for up to 18 months.

Gallatin Steel celebrated 10 years in business July 14 and shared its recent accomplishments with nearly 500 guests—current and former employees, customers, vendors, contractors, and state and local officials. Gallatin Steel President Don Daily noted the company produced a record 1.5 million tons of steel coils last year. A Kentucky senator presented a citation from the Senate recognizing Gallatin Steel’s 10 years of community service and contributions to the economic vitality of Northern Kentucky.

Stelco Inc. was granted an order of Ontario’s Superior Court of Justice extending the stay period under its court-supervised restructuring until Sept. 9. The court also adjourned a motion filed by the Steelworkers union that sought to remove the company’s exclusivity to develop and file a restructuring plan, until Aug. 16. The extension allows time in which to discuss with all stakeholders the plan outline filed July 15. The company believes its funding plan is achievable, financially responsible and compatible with the long-term viability of the company. The company filed its plan as part of an effort to emerge from the Companies’ Creditors Arrangement Act.

Chase Brass and Copper Co. Inc. signed a deal with Sambo Copper Alloy Co. Ltd., Osaka, Japan, under which Chase has exclusive rights to produce and sell Eco Brass rod and ingot in North America. Eco Brass is a lead-free brass commercially developed by Sambo. Chase, a subsidiary of Olin Corp., selected Eco Brass to meet demand for a lead-free brass alternative. The partnership with Chase finalizes Sambo’s strategy to establish marketing and sales efforts in Asia, Europe and North America.

Texas Industries Inc. completed the separation of its steel operations from TXI through a pro-rata tax-free dividend of all the common stock of Chaparral Steel Co. to TXI shareholders. Common shares of Chaparral Steel trade on the NASDAQ stock exchange under the symbol CHAP.

Northwest Pipe Co. has landed two contracts. The company will supply pipe for the Central Brown County Water Authority in Wisconsin. Northwest will supply about 118,000 feet of 48-inch diameter steel pipe to be manufactured in the Parkersburg, W.Va., plant with delivery to begin in the third quarter. The pipe will be part of a water main and distribution system linking Green Bay-area towns to a new Lake Michigan water source. The contract is valued at $13 million. The company will also supply about 18,200 feet of 48-inch and 72-inch diameter welded steel pipe for a drinking water pipeline for Albuquerque, N.M. Northwest Pipe will make the pipe at its Saginaw, Texas, plant and begin deliveries in the third quarter. The contract is valued at $5 million.

Companhia Siderurgica Nacional LLC has reached a settlement with the EPA on alleged clean-air violations at the company’s plant (Heartland Steel) in Terre Haute, Ind. EPA assessed a $15,793 penalty, and the company has agreed to a $34,273 environmental project. CSN will buy a thermal imaging camera and six laptop computers for the local fire department to help firefighters respond better to hazardous waste accidents. The agreement resolves EPA allegations that, during a March 2003 test, CSN emitted more hydrochloric acid from its steel pickle line than is allowed by federal regulations.

Siemens VAI has received an order from Mittal Steel Group to build a new hot-strip mill in Cracow, Poland. The new mill is scheduled to start operating in spring 2007 and will have an annual production capacity of 2.4 million metric tons.

Kaiser Aluminum sheet, plate, and extrusions serve as key components for a solar-powered vehicle christened “Momentum” that competed in the 2005 North American Solar Challenge Race from Austin, Texas, to Calgary, Alberta, ending July 27. Through its contributions of cash and materials, Kaiser is a “gold level” sponsor of the University of Michigan Solar Car Team, which built and raced Momentum. The Michigan Solar Car Team is a non-profit, student-run organization whose purpose is to design, finance, build and race a solar powered vehicle in several competitions across the U.S. and the world.